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In a path-breaking decision, a US court has set aside an award passed by an Arbitral Tribunal seated in Chicago against Meleveetil Damodaran, former Chairperson of SEBI.
The award had held Damodaran liable to pay about $25 million to UpHealth Holdings Inc. (UpHealth)(a U.S. based entity).
The court set aside the award against Damodaran while holding that there was no evidence in the record to hold him liable for damages.
The award was rendered in relation to a share purchase agreement between UpHealth, Glocal Healthcare Systems Private Ltd (Glocal) (an India-based healthcare company), certain shareholders/directors of Glocal and Damodaran.
Pursuant to the agreement, Uphealth acquired certain shares of Glocal held by Damodaran and others.
However, a dispute arose between Glocal, its board of directors and UpHealth in relation to UpHealth acquiring control over Glocal. Thereafter, UpHealth commenced arbitration proceedings in 2022 claiming that Glocal, its directors and its shareholders (including
Damodaran), had breached their obligations under the agreement.
The Arbitral Tribunal awarded UpHealth damages of more than $110 million, including almost $25 million individually against Damodaran.
Glocal/the Glocal board and Damodaran separately challenged the award before the US District Court, Northern District of Illinois, Eastern Division.
Such challenges to arbitral awards rarely succeed as the standard for setting aside such awards is exceedingly high.
Despite this trend, the US Court allowed Damodaran’s challenge against the award on the ground that there was no evidence on which the tribunal relied upon, to hold Damodaran liable.
The US court has remanded the case to the Arbitral Tribunal. While doing so, the court also rejected the challenge to the award by other Respondents.
Damodaran was represented in the US proceedings by Jenner & Block LLP and was advised by Shardul Amarchand Mangaldas & Co. (SAMCo), led by Managing Partner -Pallavi S. Shroff, Partners - Siddhartha Datta and Aditya Mukherjee and the team comprising Krishna Tangirala (Principal Associate), Trisha Mukherjee (Principal Associate), Aditya Thyagarajan (Senior Associate) and Chetan Kabra (Associate).
Glocal and other shareholders / directors were represented by Paul Hastings LLP. UpHealth was represented by DLA Piper and advised by P&A Law Offices.
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